VOLVO CAR GROUP results presentation Third quarter and first nine months 2018 Nils Mösko, vice president & Head of investor relations Patrik Tolf, Deputy CFO & head of Group Finance
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Volvo car group Highlights q3 2018 Retail sales +14% Net revenue +17.6% Operating income SEK 1.8bn Product launch costs, higher tariffs and license sales effects Production start in Charleston, US V60 cross country launched Polestar stand-alone AD concept revealed 3
retail Sales Q3 2018 Strong global growth Global growth +14% US +15.1% 26,307 units EUROPE +8.3% 69,318 units China +14.1% 34,712 units Comparable period: July Sep 2017 Europe is defined as EU28 + EFTA 4
Retail sales q3 2018 Retail sales up 14% Retail sales (units) 14% 154,900 Retail sales by carline Q3 2018 Retail sales by region Q3 2018 S 14% Other 16% 135,800 XC 61% 25% V US 17% 45% Europe 22% China Retail sales by carline Q3 2017 Retail sales by region Q3 2017 S Other 18% 14% Q317 Q318 XC 52% 30% V US 17% 22% China 47% Europe 5
Financials 6
Key Financial Developments Q3 and 9 months Continued strong development Retail sales (units) Net revenue (MSEK) Investments (MSEK) +14% +22% -10% +14% 413,500 472,600 +18% 147,700 179,600 +11% 22,900 20,700 135,800 154,900 48,300 56,800 6,100 6,800 Q317 Q318 YTD17 YTD18 Q317 Q318 YTD17 YTD18 Q317 Q318 YTD17 YTD18 EBIT (MSEK) -7% Net income (MSEK) Free cash flow (MSEK) 3,700 7.6% -49% 1,900 3.2% 10,400 9,700 7.1% 5.4% Q317 Q318 YTD17 YTD18 2,500-56% 1,100 7,300-8% 6,700 Q317 Q318 YTD17 YTD18-4,400 Q317-6,600 Q318-7,500 YTD17-5,800 YTD18 7
NET REVENUE WALK q3 2018 Net revenue mainly driven by volume and mix MSEK 48,300 6,200 3,100-2,600 1,800 56,800 Revenue increased in all main regions Volume, carline mix and pricing mainly driven by XC models and S90 License sales in 2017 impacts the net revenue comparison Q3 2017 Volume, sales mix and pricing Foreign exchange rates Licences Other Q3 2018 8
EBIT walk q3 2018 EBIT impacted by a decrease in sold licenses MSEK 1,100 300 3,700 EBIT margin influenced by: product launch costs higher tariffs 7.6% EBIT margin -2,600-600 1,900 3.2% EBIT margin license sales effects Q3 2017 Volume, sales mix and pricing Foreign exchange rates Licences Cost and Other Q3 2018 9
Cash Flow movements Q3 2018 Cash flow Reflecting the Cycle MSEK 52,900 13,600 400 38,900 Free cash flow MSEK -6 600 5,100 0-6,900-4,800-900 45,300 13,400 500 31,400 Working Capital development mainly related to seasonal closing of European factories Investments mainly related to production ramp up, new car models and technologies 2018 Q2 Liquidity EBITDA Working capital* Investments Other** Financing*** Undrawn credit facilities Marketable securities Cash 2018 Q3 Liquidity * Change in inventories, accounts receivables and accounts payables, ** Interest, tax and changes in other items, *** Adjusted for exchange on cash 10
Investments and R&D Investments decrease due to completion of Charleston Investments (SEKbn) R&D Expenses (SEKbn) 13.6% 14.3% 15.7% 32.7 12.7% 30.5 9.5 10.2 10.2 9.7 11.5% 18.6 19.4 5.2 4.7 8.6 9.2 25.6 9.7 10.1 6.4 17.0 13.1 15.0 7.2 5.2% 5.9% 5.7% 4.9% 4.0% 4.8 5.5 6.1 6.0 5.4 2014 2015 % of Revenue Intangible investments 2016 2017 Tangible investments Non capitalised R&D LTM Q3 2018 2014 2015 2016 2017 % of Revenue R&D expenses LTM Q3 2018 Note: Investments impact on cash flow; R&D expenses impact on P&L 11
Liquidity & debt Stable and Positive net cash position MSEK 45,300 13,400 500 20,800 24,500 2,100 7,400 Net cash position of SEK 7.4bn (Q2 2018 SEK14.4bn) 31,400 Liquidity 22,400 Debt Undrawn Credit Facilities Marketable Securities Cash & Cash Equivalents Short-term Debt Long-term Debt 12
Balanced Amortisation schedule balanced and comfortable amortization schedule MSEK 45,300 Funding by type 7,510 2,350 5,580 420 Loans 44% 56% Bonds 1,970 3,530 5,160 3,420 420 5,160 3,000 640 540 420 210 2018 Sep 30 2018 2019 2020 2021 2022 2023 2024 2025 2026 Liquidity Loans Bonds 13
Looking ahead 14
2018 - outlook Continued strong growth Strong growth and continued strong profits Upside from renewed product portfolio Strong foundation for our longer term ambitions 15
Volvo car group Longer term ambitions Direct consumer relationships >5 million Subscription with recurring revenue 50% Pure electric cars 50% Autonomous cars 30% Naturally hedged global production Superior growth Premium OEM profitability 16
Volvo car group A new structure for the future Human-centric Truly global Synergies Embracing disruption Pioneering partnerships Care by VOLVO (50%) (30%) (50%) Fastest growing premium OEM 1 Robotaxi My car always Recurring revenues My car sometimes Urban focused Spearheading electrification New brand going global A market leading AD/ADAS SW provider Wholesale business Direct consumer business PEOPLE MAKE THE DIFFERENCE Strategic affiliates 17
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